Posted on 03/05/2009 8:20:24 PM PST by NormsRevenge
WASHINGTON (Reuters) – The U.S. Federal Reserve refused to identify trading partners benefiting from a $180-billion taxpayer bailout of American International Group (AIG.N) as one lawmaker said Europe's financial stability was at stake in the rescue of the insurer.
The identity of those being helped by the massive AIG assistance package remained a mystery on Thursday despite efforts by irritated members of the Senate Banking Committee to get answers from Fed Vice Chairman Donald Kohn.
Kohn said revealing names risked jeopardizing AIG's continuing business but said the counterparties numbered in the "millions" and were spread all over the globe, including pension funds and U.S. households.
The goal was not to protect AIG or its counterparties, Kohl testified, but to prevent AIG's infection spreading. "I wish with every fiber in my body that we didn't have to come in and do what we did."
Separately, Representative Paul Kanjorski told Reuters he had been informed that a large number of AIG's counterparties were European.
"That's why we could not allow AIG to fail as we allowed Lehman (Brothers) to fail, because that would have precipitated the failure of the European banking system," said the Democrat from Pennsylvania who chairs the House insurance subcommittee.
Regulators failed to spot how much risk AIG was piling on in credit default swaps. By the time they understood, they had no choice but to pour in billions of public dollars, Kohn and other officials told the Senate panel.
Senators were outraged at the lack of detail about where the money had gone.
"That we find ourselves in this situation at all is ... quite frankly, sickening," said Senator Christopher Dodd, the Democrat who chairs the committee. "The lack of transparency and accountability in this process has been rather stunning."
(Excerpt) Read more at news.yahoo.com ...
The only spreading infection is that of socialism.
Unfortunately, the senator's remarks were not about his (ahem) mortgage "problem."
That we find ourselves in this situation at all is ... quite frankly, Mr. Dodd.....your doing.
Separately, Representative Paul Kanjorski told Reuters he had been informed that a large number of AIG’s counterparties were European.
“That’s why we could not allow AIG to fail as we allowed Lehman (Brothers) to fail, because that would have precipitated the failure of the European banking system,” said the Democrat from Pennsylvania who chairs the House insurance subcommittee.
I am not surprised that a Democrat put Europe ahead of America.
And no, I don’t care about the European Banking system
Holy crap. BTTT
The Uros aren’t our problem. Turns out their third world bad debt exposure is worse than out housing bubble.
Since when? Oh yeah, because they couldn't control where it went.
“... said Senator Christopher Dodd, the Democrat who chairs the committee. “The lack of transparency and accountability in this process has been rather stunning.”
####
In other words, “No one from AIG has sent any goodies MY way”.
Dear Senator Dodd, it’s really too bad you are upset. However, *you* are chairman of the senate banking committee. Where have *you* been for the past decade? This all happened on *your* watch.
"That we find ourselves in this situation at all is ... quite frankly, sickening," said Senator Christopher Dodd, the Democrat who chairs the committee. "The lack of transparency and accountability in this process has been rather stunning."
Bond, James Bond
do they give us money to get us out of a fix, NO, therefore, we should not give them a dime (especially taxpayers’ dimes) to bail them out.
kanjorski is the rep who was on film disclosing the 550B run on money markets (to move overseas) in september, which was then halted by the fed intraday from continuing.
I like how, despite the name, the Federal Reserve is actually a private company.
I also like how, basically, they tell Congress to go f- themselves.
Lastly, I like how nobody knows anything about what’s happening with our money. [/sarc][/cynic]
“Credit Default Swaps” — the term makes you think the AIG problem was NOT mortgage related.
Well, part of the problem IS mortgage related. A CDS can be sold, as a hedge, on ANY type of financial instrument, really.
So, they say “private business dealings” but much of the problem is STILL in the US Mortgage industry.
The live of a mortgage begins at ORIGINATION!
If ACORN and FANNIE and FREDDIE and Barney and Dodd and Clinton and others had not PUSHED the bad mortgages into the marketplace, in the first place, AIG would not have them as liabilities, on the AIG books.
This problem was caused by the LONDON AIG office. Most Americans affiliated with AIG had nothing to do with this mess. They basically sold “mortgage insurance” that was not real insurance. NO “reserves” were kept. The “premium” was PROFIT, that went straight to the bottom line, at the time of sale.
It was a pure security, falsely sold as “insurance”.
And, MUCH of it is US Mortgage Industry related.
Guess it would be a bit more difficult to send out campaign begging letters or make a friendly phone call, if one does not know who to send them to. IS Bama's administration shutting out his potential competitors early in this upcoming election cycle?
That's interesting. The Federal Reserve believes that it does not have to answer to the Congress? As in the Congress that created the Federal Reserve System by the Federal Reserve Act of 1913, and which explicitly required in Section 2B of the Federal Reserve Act that the Federal Reserve report to the Congress?
I am getting just a bit tired of this arrogant behavior by the Federal Reserve. Frankly, I don't see it doing that great of a job, and we certainly have had a successful economy prior to the Federal Reserve. If it won't conform to its fundamental constituting legislation by at least reporting its activities to the Congress, then maybe we should consider giving it the President Jackson treatment.
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